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Africa

German companies urged to invest in Africa

Most German entrepreneurs shy away from investing in southern Africa and bilateral trade is relatively low. A business lobby group wants to reverse this trend.

The Togolese ambassador to Germany, Comla Paka, has expressed his country's desire for international investors. The small West African country on the Atlantic Ocean has a lot to catch up with in terms of investment.

"We need investment in infrastructure, our roads and ports," said Paka. Traditionally Togo enjoys good relations with Germany, but economic cooperation between the two is still rare, the ambassador said.

“Many African countries find access to European markets very difficult and in the end prefer to do business with countries like China and India," he added.

Comla Paka, Togo's ambassador to Germany, has invited German investors to his country

Africa's economy is growing. National annual growth rates of six percent are not uncommon on the continent. By comparison, the German economy grew by just 0.7 percent in 2012. But many entrepreneurs in Germany still shy away from African markets.

The volume of trade between Germany and sub-Saharan Africa last year was a meager 26, 6 billion euros. That is only a sixth of the trade volume between Germany and its small neighbor, the Netherlands.

Stefan Liebing, who chairs the German African Business Association, says one reason for this is that Germany's small and medium-sized businesses perceive Africa as a continent shaken by crises and corruption.

On Tuesday (05.11.2013) his organization was invited to a conference in Bonn. The goal was to find ways of generating more enthusiasm for African markets in the German economy.“Germany has a lot of catching up to do," said Liebing. "We will lag behind in Africa, if we do not act now,” he added.

Opportunities for cooperation

Angola is one of the African countries that has benefitted from oil exploration

Ethnic conflict and economic stagnation still dominate the impression many Germans have of Africa. Florian Witt from Germany's Commerzbank finds this view outdated. The bank's second study on the African continent “Renaissance in sub-Saharan Africa“ will be published in December.

Since the beginning of the millennium, Africa's economic growth has been higher than Asia's on average. Top of the league table is oil-exporting Angola with annual growth rates of around ten percent.

The southern African country has benefited from high commodity prices on the world market and now even has work for unemployed graduates from troubled Portugal, its former colonial master.

With its growing population, Africa needs to create new labor markets, Witt said. It should not just concentrate on exploiting natural resources, but also consider placing more emphasis on manufacturing. This could be a profitable market for African and German companies.

Political involvement necessary

Stefan Liebing said German companies tend to get lost into the details when they want to move into African markets, unlike emerging economic powers like Brazil, Russia, India and China.

These countries' apporach should not, however, be copied elsewhere, said Liebing. He was referring to China's strict policy of non-interference in the internal affairs of African partner countries, which included overlooking human rights abuses.

China has undertaken major infrastructure projects in Africa such bridge construction

But Liebing acknowledged that "there are things that we should learn from the BRIC countries - for example, we should learn to offer package solutions: It is no use just selling turbines in Africa. You also have to work out an agreement with the respective government on how you are jointly going to solve the country's electricity problem.”

This not only requires an improved sense of cooperation on the part of private companies, but also stronger commitment by German politicians, said Liebing. Compared to their French counterparts, German politicians are very infrequent visitors to Africa

More German diplomatic activity was needed to strengthen Germany's economic interests in Africa and lend them the credibility they deserved, Liebing maintained.